Cap-and-Trade: Everything Old Is New Again
In its story “Big bucks at stake in cap-and-trade allocations”, Tuesday’s Greenwire (subscription required) offered another in a series of examples of how even (particularly?) journalists who specialize in writing about things like environmettal policy cannot quite grasp certain fundamentals inherent in fashionable environmental policies. Or else are simply bowled over by breathless press releases and rhetoric by the well-heeled Big Green and rent-seeking machine.
To wit, consider the following regrettable word choice:
But key players are split on a critical question behind cap-and-trade: how to distribute credits worth tens or even hundreds of billions of dollars to the carbon dioxide-belching [NB: objectivity alert] industries faced with a mandatory new U.S. carbon market….Ideas abound for how to distribute the credits [that would be mandated, created and allocated under rationing schemes floating around Capitol Hill], but there is a great divide over whether U.S. climate policy should drive newfound wealth toward the CO2-releasing industries or into the Treasury….Assuming a CO2 credit equals about $25 per ton, the market would be worth about $100 billion a year, or 1 percent of the U.S. gross domestic product. For the range of bills introduced since Democrats won control of Congress last November, economists project the new U.S. program will generate somewhere between $50 billion and $300 billion in new income annually. Stretched out over the first 30 years, the U.S. carbon market is poised to produce between $2 trillion and $9 trillion. [emphases added]
Ummm…”newfound wealth”? “New income”? From a rationing scheme demanding redistribution? Upon even the slightest scrutiny, isn’t this transfer instead identifiable as scarcity rents coupled with deadweight loss identified at up to 1% of GDP? For shuffling ration coupons around I might add, not reducing any emissions (as will soon be exposed as the hallmarks of Europe’s ETS in a pending follow-up study by OpenEurope).